Which term refers to the type of options sold by an investor who writes standard call options against stock held in his or her portfolio?

Question

Quizplus · Accepted Answer

Writing standard call options against stock held in a portfolio is known as a covered call strategy. This is because the investor holds the underlying stock as a hedge or cover against the potential obligation of delivering the stock if the call option is exercised. In contrast, naked call writing refers to the sale of call options without holding an offsetting position in the underlying stock, which is a riskier strategy. In-the-money and out-of-the-money refer to the relationship between the strike price of an option and the price of the underlying asset, but they are not directly relevant to the question.

Which Term Refers to the Type of Options Sold by an Investor